How Does Airbnb Impact Local Housing Markets?

If you’ve ever used Airbnb, you know it’s pretty fantastic. You can find just the right kind of place to stay in pretty much anywhere you might want to visit. You can research, book, and communicate with the owner all through an app on your phone, and it’s a pretty seamless way to do short term trips.

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But while it’s a great solution for taking trips – or for making money on the side if you rent out your own place – is it part of a much bigger problem?

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Here are Five Fast Facts on Airbnb’s impact on the housing market:

1. 📈 Explosive Growth - Airbnb has been on a revenue rocket lately, with the number of listings shooting up 62% since 2020. Annual revenue has quadrupled in the last five years.

2. 🤞 The Risks - Hotels are pretty tightly regulated, but Airbnb places…are not. This opens up a lot more potential for taking advantage of guests, poor service, excessive fees, and other shenanigans. 

3. 📉 On Prices - Studies have started showing that Airbnb properties can have a negative impact on the local housing market: in neighborhoods where owners aren’t actually living in the property, it drives up housing prices and rents.

4. 🏘️ On Supply - These studies also show Airbnb reduces the number of long term rental units that lower income folks rely on and are in short supply nowadays.

5. 🏙️ The Reality - Airbnb really took off when people realized they could make fast cash with it. In 2020, there was 40% more growth in vacation home sales than in normal home sales! People are buying what little supply is out there on the market and converting to short term Airbnb rentals rather than (much less profitable) long term rental housing. This isn’t just individuals, either - megacorporations and real estate conglomerates love the fast profit and low regulation! This drives the supply of homes and apartments down even further, which then drives up prices. They win on both ends of it!

🔥Bottom line: In some ways, it all just makes sense - after all, there’s nothing wrong with turning an honest profit or making good money. But, when you have abuses and excesses in the system that start to warp the housing markets, well, it causes real problems. That’s why some cities have started enacting laws limiting Airbnb properties in different ways to help stabilize the housing market there. We’ll see how it all shakes out over time, but Airbnb has definitely rocked the housing market in many places, and shows no sign of stopping! Whether this is good or bad probably depends on whether you use or own Airbnb properties, but either way it’s something to be aware of.

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What Airbnb experiences have you had or heard about?

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